How to convert monthly interest rate to annual rate

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How to convert monthly rate to annual rate

Check out how to easily convert the Monthly Rate to an Annual Rate:

1. Fill in the monthly interest rate value. 
2. Click or tap “Calculate”. 
3. That's it! You'll get the annual interest rate immediately!

Why convert the monthly rate to an annual rate?

It's always important to know the interest rate for a given period. Therefore, calculating the monthly to annual interest rate is crucial to understanding your financial situation. Here are the most common conversion scenarios:

• For those who have an investment and want to have a projection of how much income they will have in a year. 
• For those who have a debt and want to know what the annual interest rate will be, having only the monthly amount. 
• For those who want to take out a loan, only have the monthly rate and want to know the annual rate (whether for comparisons or financial organization). 

In these and many other situations, it's worth using our monthly to annual interest converter to know exactly what rates you're paying.

Formula to convert monthly rate to annual rate

To convert monthly interest to annual interest, a simple mathematical formula is used. Here's how it works:

ja = [(1 + jm)^a/m – 1] x 100

See what the formula means:

    already = annual interest rate, the final rate you want to know.

    jm = monthly interest rate, which you have.

    the = total period of interest calculation (in this case, 12 months).

    m = period you have the rate (in this case, 1 month). 

With this account, you can convert your interest rate from monthly to annual. 

It is worth remembering that the term “a” and “m” must be calculated in a similar way, that is, “a” as 12 (months) and “m” as 1 (month). 

How the monthly to annual rate calculation works

See a practical calculation to convert monthly interest rates to annual interest rates, in a simple way.

If you have an investment that has a monthly yield of 1%, what will be the annual yield? 

Check out our formula:

ja = [(1 + jm)^a/m – 1] x 100

ja = [(1 + 0.01)^12/1 – 1] x 100
ja = [(1.01)^12 – 1] x 100
ja = [1.1268 – 1] x 100
ja = [0.1268] x 100
ja = 12.68%

Done. Using the formula, you can calculate the annual interest rate. 

Similarly, if you have your annual interest rate and want to know your monthly income, you can do this calculation. Want to know how? Click here to see our calculator and find out the formula. 

Monthly Interest Rate FAQs

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